Define: Implied Term By Custom

An implied term by custom is a legal principle in contract law that refers to a term or condition that is not expressly stated in a contract but is inferred based on the established customs or practices of a particular trade, industry, or community. This type of term is implied into the contract because it is presumed that the parties would have intended to include it, given the prevailing customs or usage in the relevant context. Implied terms by custom reflect the common expectations and understandings within a specific community or industry and are considered binding on the parties as if they were expressly written into the contract. Courts may recognise implied terms by custom when interpreting contracts, particularly when the parties are silent on certain matters but would be expected to adhere to established norms or practices in the relevant industry or trade.

An Implied term in a contract that arises from the custom in a particular trade or a particular locality. For example, in Smith v Wilson (1832) the tenant of a farm given notice to quit was held to be entitled to compensation for the seeds he had used in the course of farming the land. Although there was no such term in the agreement between landlord and tenant, it was the custom in that locality.

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This glossary post was last updated: 29th March, 2024.